Oil prices slipped in trading on Monday as the US dollar recovered from last week’s losses. QEP Resources photo.
Oil prices down 1.5 per cent Monday
Oil prices fell over one per cent as a rising US dollar and increasing US crude output put pressure on prices which, despite Monday’s losses, are on track for the biggest gain in January in the past five years.
By 2:45 p.m. EST, Brent crude was down 1.40 per cent to $69.17/barrel. So far this month, Brent has risen by 6.3 per cent and is headed for its biggest rise in January since 2013.
US WTI fell by 60 cents to $65.54/barrel. The Canadian Crude Index slipped to $38.30.
Phil Flynn, analyst at Price Futures group told Reuters “There seems to be a little profit-taking today because the stock market is weaker and longs keep adding to the long side of the equation”.
Last week oil prices were supported by a sliding US dollar, and the greenback is set to fall 3 per cent this month. However, the dollar index rebounded nearly 0.5 per cent since Friday to $89.59 and is now pressuring oil prices.
“After six weeks of losses balance is inevitable. Its influence has really resurged as of late to where the dollar index below $90 has propped up oil,” John Kilduff, partner at Again Capital LLC told Reuters.
According to Reuters, crude prices drew support in recent weeks from a large premium in the front-month Brent oil contract over those for future delivery. Investment in crude futures and options hit a new record high last week.
Oil prices were also underpinned by rising growth in major economies and the OPEC supply cut agreement.
Reuters reports Iraq’s oil minister said on Monday that even though his country is trying to boost its oil export capacity, it will honour its pledges to cut production as part of the OPEC agreement.
The OPEC cuts, however, have been offset somewhat by increased production in the United States.
US Energy Information Administration data shows US output has jumped over 17 per cent since mid-2016 to 9.88 million barrels per day (b/d) and is expected to top 10 million b/d soon.
On Friday, Baker Hughes reported the US rig count rose by 12 to 759.
“We believe that today’s oil prices project a too rosy picture,” Julius Baer’s head of macro and commodity research Norbert Ruecker told Reuters.